Colombia sees billion-dollar bonanza from legacy of marijuana trade

Helen Murphy, Nelson Bocanegra

9 Min Read

CORINTO/RIONEGRO, Colombia (Reuters) - Tired of living in fear of arrest or running afoul of drug traffickers, Romairo Aguirre is ready to destroy his illegal plantation of 1,500 marijuana bushes in the mountainous Cauca region of southwest Colombia and become legitimate.

View of a marijuana plant for medicinal use in the Pharmacielo company in Rionegro, Colombia March 2, 2018. Picture taken March 2, 2018. REUTERS/Jaime Saldarriaga

Like many of the farmers who grow cannabis near the town of Corinto, Aguirre hopes President Juan Manuel Santos’ plan to turn Colombia into a major producer of medical marijuana means he can find work from one of a dozen companies launching in the South American nation.

Santos - who leaves office in August - passed a law two years ago legalizing medical cannabis for domestic use and export. It aims to take the marijuana trade from the hands of Marxist rebels and traffickers, transforming Colombia into a multibillion-dollar producer for the pharmaceutical industry.

“We’re just realizing marijuana’s potential. It could be the next economic bonanza - like coffee was,” said Aguirre, 61, before a man and a woman arrived at his farm to buy sacks of dried cannabis buds.

“I could go to jail for this but that won’t happen if I’m working in medicinal.”

Farmers who want to be part of Colombia’s medical marijuana project are required to destroy their illegal crops.

Colombia has already issued 33 licenses and hopes to grow as much as 40.5 tons a year of medical marijuana - accounting for roughly 44 percent of licenses issued globally.

So far, however, the government has authorized production of seeds and marijuana only for scientific research, not for commercial production of medical cannabis.

Andres Lopez, head of Colombia’s National Narcotics Fund that oversees use of legal narcotics, said it was putting in place its team to regulate the industry. The new law calls for rigorous testing to prevent illegal cannabis from entering the medical market.

In time, growers estimate that the Andean nation could capture as much as one-fifth of a global market that could be worth $40 billion a year - a significant economic boost as Colombia seeks to diminish its reliance on dwindling oil reserves.

That would be more than coal exports, and also more than exports of flowers, coffee and bananas combined.

“Colombia’s betting on diversification of exports, of its portfolio and this is one of the most aggressive ways,” said Rodrigo Arcila, head of the cannabis growers association.

The new industry will not produce smokable marijuana but focus on oils, creams and inhalers produced in laboratories and personalized by prescription to each patient, he said.

Growers say that production would be enough to treat pain and symptoms of some 4.5 million patients nationally and 60 million in Latin America suffering from conditions such as cancer, multiple sclerosis and epilepsy.

With the United States - historically the main market for its illegal marijuana - closed to medicinal imports, Colombia will look to Latin America for sales, Arcila said. Countries including Mexico, Peru and Argentina have legalized its medical use.

MARIJUANA STIGMA

The World Health Organization has said there is initial evidence that cannabis compound cannabidiol (CBD) could have therapeutic value in the treatment of epilepsy and related conditions. A WHO committee is due to undertake a broad review of cannabis and cannabis-related substances in June.

Natalia Tangarife has no doubt about its benefits. Every three months, the 32-year-old travels 150 miles (241 km) from her home in the town of Dosquebradas to a marijuana plot she rents from indigenous farmers in Cauca.

She has learnt to extract enough oil from the 40 spiky-leafed plants for her 6-year-old son Jacobo and 30 other children suffering from chronic refractory epilepsy, which is resistant to conventional treatments.

“It was a miracle! When I gave Jacobo the oil he slept all night, he was calm and stopped screaming. I cried,” she said as Jacobo rocked in his wheelchair, his arms and head jerking erratically.

“In two months, he went from 40 convulsions a day to two.”

Yet, since marijuana remains illegal for all but personal use, Tangarife risks being arrested for supplying others.

Some on the political right in Colombia, including former Public Prosecutor Alejandro Ordonez, have opposed the legalization on the grounds it sends the message marijuana is good for your health and could lead to a full legalization of the drug.

Federico Cock, head of Colombia-Canadian-owned Pharmacielo, agrees, but says - in a country where marijuana has long fueled violent crime - that may not be a bad thing.

“We’ll go from a bad, negative history to developing a product that destigmatizes the history of Colombia and our sad past,” said Cock, standing among rows of cannabis bushes at a plantation near Medellin - where Pablo Escobar ran his drug trafficking empire in the 1980s.

Pharmacielo, which has a 12-hectare operation in Rionegro, was the first company to receive a license in Colombia and Cock hopes to start commercial production by the end of the year - if the government gives final approval.

With banks reluctant to lend to the nascent industry, Pharmacielo is in the process of listing on the Toronto stock exchange, pending regulatory approval.

Canada, already at the forefront of the medical cannabis industry, is due to legalize recreational cannabis this year. It will be only the second country to do so, after Uruguay.

While Colombia is several years behind Canada, its lower cost of production due to its less seasonal climate gives a competitive advantage that makes it attractive to investors.

Sidney Himmel, chairman of Toronto-based Khiron Life Sciences Corp, a medicinal cannabis company setting up in Colombia, said the arrival of Canadian companies would encourage investors to lend much-needed capital.

“The dollars required to fund this are massive,” he said.

FALSE HOPE

Vice Trade Minister Olga Lucia Lozano said the windfall for Colombia could be massive, recalling that its flower industry also began as a collaboration between scientists and farmers and is now the world’s second-biggest exporter.

“Drugs have caused more pain than anything else - I have seen friends die,” she said. “But on those ashes we’ll build a new industry.”

Representatives for the leading candidates in the May 27 presidential election - including right-wing frontrunner Ivan Duque and his leftist rival Gustavo Petro - did not respond to requests for comment on their policies on medical marijuana.

Santos wanted medical marijuana to serve as a crop substitution program, allowing thousands of growers to be part of a legitimate industry and to help eliminate the illegal trade. But that idea appears to have gone up in smoke.

Companies say they want to develop conflict zones but the number of hectares allowed by their licenses means many existing growers will be shut out.

Pharmacielo, which has a four-hectare pilot project in Corinto, said it can employ about 18 farmers in each hectare, but since the government stipulates that it must provide farmers with a minimum of 10 percent of the total productive land, the farmers have only half a hectare.

“We’ve been offered false hope,” said Hector Sanchez, who destroyed his marijuana plants to be part of a medical cooperative and is still waiting to start work. “If growers can’t be involved, they’ll just go back to marijuana.”

To create their own medical marijuana business, the farmers would need at least $20 million a year - in laboratory equipment among other costly scientific technology - an amount far from reach.

Corinto’s mayor, Eduard Garcia, says legal marijuana could solve many of the region’s social problems and prevent youths from joining rebel groups and crime gangs.

It could create far more jobs than nearby sugar plantations, which employ just one worker for every eight hectares, he said.

“The companies should dedicate themselves to the products, to extraction, but let the crops come from the farmers,” he said in his office in the town square. “They’re missing an opportunity.”